Guy v. Travenol Laboratories, Inc.

• Decision Date: 04 March 1987
• Docket Number: No. 86-2553,86-2553
• Citation: 812 F.2d 911
• Parties: , 106 Lab.Cas. P 55,761, 1 Indiv.Empl.Rts.Cas. 1553 Robert GUY, Plaintiff-Appellant, v. TRAVENOL LABORATORIES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 911

812 F.2d 911

55 USLW 2488, 106 Lab.Cas. P 55,761,

1 Indiv.Empl.Rts.Cas. 1553

Robert GUY, Plaintiff-Appellant, v. TRAVENOL LABORATORIES, INC., Defendant-Appellee.

No. 86-2553.

United States Court of Appeals Fourth Circuit.

Argued Nov. 13, 1986.

Decided March 4, 1987.

Phillip Gregory Kelley (Lentz, Ball & Kelley, P.A., Asheville, N.C., on brief) for plaintiff-appellant.

Philip Marshall Van Hoy (Mullins & Van Hoy, Charlotte, N.C., Maynard, Youngs, Associate Gen. Counsel, Deerfield, Ill., Travenol Laboratories, Inc. on brief), for defendant-appellee.

Before ERVIN and WILKINSON, Circuit Judges, and HAYNSWORTH, Senior Circuit Judge.

WILKINSON, Circuit Judge:

Robert Guy brought this wrongful discharge action after being fired from his supervisory position at Travenol's North Carolina drug manufacturing plant, allegedly for refusing to falsify certain production and control records. Travenol denied those allegations in its answer and responded that, under North Carolina's doctrine of employment at will, an employer may fire an employee for virtually any reason. The district court granted defendant's motion to dismiss for failure to state a claim under North Carolina law. We think the district court properly interpreted North Carolina law, and we affirm its judgment.

I.

In his complaint, Guy alleged that Travenol employees were falsifying certain records "pertaining to the quality and quantity" of pharmaceuticals that drug manufacturers are required to keep under the Food and Drug Administration regulations. 21 C.F.R. Sec. 211.180-198. Falsification of these records may violate the Food, Drug, and Cosmetic Act. 21 U.S.C. Sec. 301, et seq. (1972). When Guy allegedly notified his supervisors that they were violating federal law, he was told to cooperate. When he allegedly refused to falsify the records to exclude wasted and defective drugs, he was fired. Travenol denies these allegations. Because the complaint was dismissed under Fed.R.Civ.P. 12(b)(6) for failure to state a claim, however, these alleged facts must be accepted as true. In his prayer for relief, plaintiff claims compensatory damages of $12,138 and punitive damages of $1,000,000.

II.

Federal courts must consider the availability of any wrongful discharge suit in North Carolina against the backdrop of North Carolina's manifest commitment to the doctrine of employment at will. The North Carolina Supreme Court first recognized the doctrine in the 19th century and has reaffirmed its contemporary vitality. The state Supreme Court has applied it even in cases where the employer had indisputably offered permanent employment. Its cases admit but two exceptions, neither of which is applicable here.

In its pristine form, the doctrine of employment at will permits an employee to be discharged for almost any reason. As a matter of tort law, the doctrine precludes an action for wrongful discharge. Tuttle v. Kernersville Lumber Co., 263 N.C. 216, 139 S.E.2d 249, 251 (1964); Miller v. Ruth's of North Carolina, Inc., 69 N.C.App. 672, 318 S.E.2d 2, 4 (1984). As a matter of contract law, the doctrine precludes the unilateral representations of an employer from forming part of the contract of employment. Smith v. Monsanto Co., 71 N.C.App. 632, 322 S.E.2d 611, 613 (1984); Still v. Lance, 279 N.C. 254, 182 S.E.2d 403, 406 (1971).

The doctrine of employment at will apparently began in Edwards v. Seaboard R.R. Co., where the court stated that an employee and employer were free "to sever their relationship at will, for their own convenience." 121 N.C. 490, 28 S.E. 137, 137 (1897). During the following ninety years, the North Carolina Supreme Court has continuously accorded employers broad freedom in employment decisions. For example, when an employer offered an employee a "regular permanent job", the court found an at will employment relationship. Malever v. Kay Jewelry Co., 223 N.C. 148, 25 S.E.2d 436, 436 (1943).

Even where an employer agreed that an employee would "have a permanent job as long as (his) work was satisfactory," the court again found the employment to be at will. Tuttle v. Kernersville Lumber Co., 263 N.C. 216, 139 S.E.2d 249, 250 (1964). On one occasion, an employee was told that, if he wanted to make a career with the company, he had to attend a three-week training session out of town. Five days after arriving at the session, the employee was fired without cause. The court said that the employment was terminable at will, even if the employer had offered a job "upon a permanent basis." Howell v. Commercial Credit Corp., 238 N.C. 442, 78 S.E.2d 146, 147 (1953).

The North Carolina Supreme Court summed up the doctrine when it said "a contract of employment, even though it expressly refers to the employment as 'a regular, permanent job,' is terminable at the will of either party irrespective of the quality of performance by the other party." Still v. Lance, 279 N.C. 254, 182 S.E.2d 403, 406 (1971). North Carolina continues to adhere to this version of the "at will" doctrine. In its latest case on the subject, the state Supreme Court reaffirmed the settled rule that an "employment contract in North Carolina is terminable at the will of either party." Presnell v. Pell, 298 N.C. 715, 260 S.E.2d 611, 616 (1979).

The North Carolina Court of Appeals has built upon the state Supreme Court's strong support for the concept. In one case, the employee handbook provided that laid-off employees would be hired back according to seniority. When the employer laid off some employees with the possibility of recall within the year, it subsequently hired independent contractors and temporary help rather than rehire the idled employees. The court held that the laid-off workers had no cause of action because their employment was terminable at will. Smith v. Monsanto Co., 71 N.C.App. 632, 322 S.E.2d 611 (1984).

In Bennett v. Eastern Rebuilders, Inc., 52 N.C.App. 579, 279 S.E.2d 46 (1981), a union employee was promoted to management. Because of the employee's concern over job security, the employer agreed to demote her to her old position, rather than fire her, if her work proved unsatisfactory. The company subsequently fired the employee without complying with this transfer agreement. Although the employee had explicitly bargained for job security, the court granted only nominal damages, finding that the employer was entitled to demote the employee and then fire her for any reason.

As these cases reveal, the at will doctrine commands long and continued support in the North Carolina courts even in what may appear unusual and extenuating circumstances. The courts of North Carolina have recognized that every adverse employment decision presents a potentially litigable conflict of fact and perception, that the judicial resources of North Carolina should not generally be expended on such matters, and that the freedom of employers to dismiss employees perceived as unreliable or incompetent should not be lightly circumscribed.

It is, of course, immaterial whether a federal court sitting in diversity subscribes to North Carolina's choice in this perennial area of state law controversy. The North Carolina Supreme Court has recognized but two exceptions to the doctrine: an employee has a wrongful discharge suit only when he obtains an employment contract of fixed duration or gives some extra consideration, such as a change of residence or the dismissal of a personal injury claim, in return for permanent employment. Still, 182 S.E.2d at 405; Tuttle, 139 S.E.2d at 251. While Guy alleges not that he was arbitrarily discharged, but that he was discharged for refusal to perform a wrongful act, his lawsuit cannot be viewed apart from a near-century of commitment in the state of North Carolina to the doctrine of employment at will. Indeed, Guy pleads the very tort and contract claims that the doctrine has always been thought to proscribe.

III.

Confronted with this body of precedent, Guy relies upon the recent case of Sides v. Duke Hospital, which he believes creates a public policy exception to the at will doctrine. In Sides, the North Carolina Court of Appeals held that an employer cannot fire an employee for refusing to commit perjury. 74 N.C.App. 331, 328 S.E.2d 818 (1985). As the Sides opinion and three subsequent appellate cases recognize, this decision created only a narrow public policy exception to the doctrine of at will employment. Because it is a limited exception, most readily explained as an exercise of the judiciary's supervisory powers over the proper conduct of court proceedings, Sides does not provide Guy with a viable cause of action.

In Sides, a nurse alleged that she was fired because she refused to perjure herself both as a deponent and a witness in a medical malpractice case. The court's opinion emphasized the need to prevent perjury and preserve judicial integrity. As the court noted, perjury is "an affront to the integrity of our judicial system, an impediment to the constitutional mandate of the courts to administer justice fairly, and a violation of the right that all litigants in this State have to have their cases tried upon honest evidence fully given." Sides, 328 S.E.2d at 823-24. To deny a cause of action in that case would have been a "grave disservice to the public and the system of law that we are sworn to administer." Sides, 328 S.E.2d at 824.

Despite some language dealing with the general need to uphold the law and support public policy, the court's holding was very specific: "no employer in this State, notwithstanding that an employment is at will, has the right to discharge an employee ... because he refuses to testify untruthfully or incompletely in a court case." Sides, 328 S.E.2d at 826. The holding rests on the belief that the need to protect the judicial process from the perjured testimony of an intimidated witness outweighs the employer's right to fire an employee. This limited exception to the doctrine is not surprising. The...